A deal just announced between the government and the major telephone companies promises to cut your long-distance telephone bill. Target date, July 1.
But you don’t have to wait until then to reduce the charges you pay. Odds are, there’s an even cheaper plan right under your nose, which you can get with a single telephone call.
The July 1 rate cuts are part of an agreement between AT & T; and the Federal Communications Commission.
Due to the restructuring of local and long-distance service, long-distance carriers will reap an estimated $1.7 billion windfall this year. AT & T; has agreed to return its share to consumers, in the form of lower long-distance rates for calls within the United States.
Rates for standard service will drop 5 percent during daytime and evening hours and 15 percent on nights and weekends. Sprint and MCI are expected to make similar cuts.
Nearly two-thirds of all residential customers get standard service, according to The Yankee Group, a Boston-based telecom research firm. July will bring them their first across-the-board rate cut since 1989, says Robert Pepper, chief of the FCC’s office of plans and policy.
In 1996, standard rates actually went up, although in theory competition should have brought them down.
Where you see price competition today is not in the average user’s rates but in the carriers’ special discount “calling plans.” You can get one yourself, just by giving your carrier a call.
Some are one-rate plans, which charge you the same per minute no matter when or where you call. These are especially good deals for people who use the telephone during daytime hours for example, if you’re running a home-based business.
Some plans provide discounts to people who make large numbers of calls. Some offer low rates on calls to a particular geographical area. The right plan could save you 30 to 50 percent off the standard rate.
You don’t have to figure out the cheapest plan yourself. Your carrier will analyze your bills by computer and give you the service that costs the least.
The cheapest plan in your area, however, might come from a competing carrier. To check this out, get the following two charts:
1) The Tele-Tips Long Distance Comparison Chart $5 for the residential chart, $7 for the small-business chart from the Telecommunications Research & Action Center (TRAC), P.O. Box 27279, Washington, D.C. 20005. (Enclose a self-addressed, business-size envelope affixed with 55 cents in stamps).
2) The free Long Distance Rate Survey, from Consumer Action, 116 New Montgomery St., Suite 233, San Francisco, Calif. 94105. (Send a self-addressed, business-size envelope with a regular stamp).
AT & T;, MCI, and Sprint currently offer competitive rates to heavy long-distance users, TRAC concludes. Small companies like Frontier and Matrix are cheaper for people with modest long-distance bills. But the smalls don’t match the Big Three in customer service, says TRAC counsel Samuel Simon.
The July 1 rate cuts will benefit people on calls plans, as well as those with standard service. But recheck your plan in August or September, to see if you still have the lowest rate.
A deal that cuts rates on international calls should be signed in August, says FCC Chairman Red Hundt.
Competition is slowly coming to local telephone service as well as long distance. Consumers have a choice of carriers in about three dozen markets so far, says Jeffrey Kagan, head of Kagan Telecom Associates in Marietta, Ga.
MCI is targeting businesses with six lines or more. In parts of California, it’s seeking residential customers, too. AT & T; has entered four states so far California, Connecticut, Illinois and Michigan, with Georgia pending. It’s promoting itself to residences and businesses alike. Sprint is still laying its marketing plans.
AT & T; and MCI both complain that some local phone companies Pacific Bell gets a big mention are making it hard for people to switch. Pacific Bell Vice President Lee Bauman retorts that they keep sending in orders wrong. (Competition, ain’t it sweet?)
Kagan thinks that eventually we will all have a permanent phone number that follows us everywhere. We’ll be billed the same rate, no matter where we’re calling from.
But you have to be aggressive in seeking out lower rates. Otherwise, you’ll pay more than you have to for local service the way many of you have been overpaying for long distance, too.
Speaking of overpaying
I’m hearing some grumbling from investors who recently bought real estate investment trusts.
Traditionally, these are stocks you own for income and stability. REITs currently yield an average of 6.5 percent, compared with around 5.5 percent for utility stocks. They’re also considered safe havens when the general stock market falls.
But what has pulled crowds of new investors into REITs isn’t their income, it’s their growth. Last year, the average REIT jumped by 36 percent, according to an index of 108 REITs maintained by Morgan Stanley, a Wall Street investment firm.
In mid-March, however, the bloom left the rose. Since then, the REIT index has declined about 5 percent. Some individual REITs are down 10 percent and more.
So what’s happening? Do REITs belong in your portfolio or not? REITs are real estate investment companies, like Simon Properties in Indianapolis or Post Properties in Atlanta. They buy, own and manage real estate: apartments, office buildings, hotels, mobile home parks, industrial parks, nursing homes, shopping centers, regional malls, outlet centers and self-storage buildings.
REITs tend to specialize in certain kinds of real estate, either nationally or within a single region of the country. They expand by acquiring existing properties and developing new ones. Most are well-established companies, not property speculations.
By law, 95 percent of their income from rents, leases and the occasional capital gain must be distributed to investors every year. REITs trade on a stock exchange. You buy them through discount or full-service stockbrokers, paying normal brokerage commissions.
Clearly, REITs’ stock prices got too far ahead of earnings. If you followed the crowds and bought at the price peak, you’re in a funk.
But if you sell now and hippety-hop to the next zippy stock group, you will probably lose again. Bunny rabbits make lousy investors. They wind up in stews.
Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.
